In today’s briefing:
- ANZ to Acquire Suncorp Bank: Equity Raise & Regulatory Approvals
- Nikkei 225 Sep Annual Review Predictions – 3 In, 3 Out
- ANZ Bank (ANZ AU) Nixes MYOB, Yeas SunCorp Bank, To Raise A$3.5bn of Equity
- Tianqi Lithium: Upcoming Events & AH Premium
- LG Energy IPO Lock-Up – Largest Lockup Release of the Lot at US$3bn
- SOHO China (410 HK): Still Toxic
- NIFTY50 Index Rebalance Preview: Adani Enterprises Should Replace Shree Cement
- StubWorld: Swire Acquires Coke’s Ops in Vietnam & Cambodia
- Nikkei 225 March 2023 Rebal On The Follow – Predictions (3 In, 3 Out) & Problems
- STAR50 Index Rebalance Preview (Sep): Adds Outperforming the Deletes
ANZ to Acquire Suncorp Bank: Equity Raise & Regulatory Approvals
- Australia and New Zealand Banking Group (ANZ) (ANZ AU) has announced that it is acquiring Suncorp Bank from Suncorp (SUN AU) for an all cash consideration of A$4.9bn.
- ANZ will fund the Suncorp Bank acquisition by a fully underwritten 1:15 pro rata accelerated renounceable entitlement offer to raise A$3.5bn at A$18.9/share, a 12% discount to TERP.
- A small increase in the Herfindahl-Hirschman Index (HHI) for the mortgage lending market will make it difficult for ACCC to deny approval for the acquisition.
Nikkei 225 Sep Annual Review Predictions – 3 In, 3 Out
- The Nikkei 225 Annual Review is in September based on end-July data. Jumping the gun, I propose 3 additions and 3 deletions with granular data and details offered per sector.
- I see ¥600bn to buy and a funding trade of 99% of that. There are 15+ names with more than 1 day of ADV to sell (funding only).
- The impact on Real World Float is non-negligible. One name in particular is deserving of attention.
ANZ Bank (ANZ AU) Nixes MYOB, Yeas SunCorp Bank, To Raise A$3.5bn of Equity
- Australia and New Zealand Banking Group (ANZ) (ANZ AU) this morning made a flurry of announcements. First and foremost, ANZ withdrew from discussions on MYOB.
- Q3 earnings ended 30 June saw revenue +5%, lending up 3%yoy, markets revenue +7%, NIM up 3bp (rising rates helps). Basel3 APRA Level2/Level1 CET1 Ratios were 11.1%/10.4%.
- But the big news: ANZ is buying SunCorp Bank from SunCorp (SUN AU) for A$4.9bn (1.3x NTA), and will raise A$3.5bn through a 1 for 15 renounceable rights offering.
Tianqi Lithium: Upcoming Events & AH Premium
- Tianqi Lithium (002466 CH) trades at an 84% premium to Tianqi Lithium (9696 HK) and the AH premium has been volatile since listing.
- Tianqi Lithium (002466 CH)‘s potential inclusion in the MSCI China and FTSE All-World Index could keep the AH premium at a higher level as compared to its peers.
- Tianqi Lithium (9696 HK)‘s inclusion to Southbound Stock Connect in August and potential inclusion to the MSCI and FTSE indices will help keep a lid on the AH premium.
LG Energy IPO Lock-Up – Largest Lockup Release of the Lot at US$3bn
- LG Energy Solution (LGES) raised US$10.8bn in its South Korea IPO. The stock was listed on 27th Jan 22. Its six-month lockup is set to expire soon.
- LGES is the EV battery unit of LG Chem. The company is a major supplier to customers including Tesla and General Motors.
- In this note, we will talk about the lock-up dynamics and updates since our last note.
SOHO China (410 HK): Still Toxic
- Ten months after China’s SAMR torpedoed Blackstone’s Offer, SOHO China (410 HK) has fallen 61%. Its portfolio of high-quality properties are currently trading at 0.2x P/B.
- Recent woes concern electricity price violations, tax evasion, and now an investigation into CFO Ni Kuiyang’s alleged insider trading.
- SOHO is trading cheap on a standalone basis; and to peers. This is still not a good reason to get involved.
NIFTY50 Index Rebalance Preview: Adani Enterprises Should Replace Shree Cement
- With over 90% of the review period complete, Adani Enterprises (ADE IN) is a high probability inclusion to the NIFTY Index (NIFTY INDEX) and will replace Shree Cement (SRCM IN).
- We estimate passive NIFTY Index (NIFTY INDEX) trackers will need to buy nearly 7% of the real float on Adani Enterprises (ADE IN) and the stock should continue to outperform.
- Adani Green Energy (ADANIGR), Adani Transmission (ADANIT) and Avenue Supermarts Ltd (DMART) have higher average free float market caps and could be included if added to the F&O segment.
StubWorld: Swire Acquires Coke’s Ops in Vietnam & Cambodia
- Swire Pacific (A) (19 HK) expands its beverages ops, its best-performing unlisted segment, via the acquisition of Coke bottling operations in Vietnam and Cambodia.
- Preceding my comments on Swire – and Swire Properties (1972 HK) and Cathay Pacific Airways (293 HK) – are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Nikkei 225 March 2023 Rebal On The Follow – Predictions (3 In, 3 Out) & Problems
- Yesterday I published Nikkei 225 Sep Annual Review Predictions – 3 In, 3 Out. Assuming correct, and we move the last 6mos of data 6mos forward, March23 Rebal is below.
- This too is 3 in, 3 out. But it is complicated. “Required” changes would move the sector balance further out of whack.
- And while some of the trades are “interesting”, the rebal is smaller and the bigger question is “What comes after that?”
STAR50 Index Rebalance Preview (Sep): Adds Outperforming the Deletes
- Over 96% of the way through the review period, we see 1 change using a 12 month minimum listing history, and 5 changes using a 6 month minimum listing history.
- We expect the index committee to continue using the shorter minimum listing history since the potential adds have much larger market caps than the potential deletes.
- The potential adds have outperformed the potential deletes over the last month and there could be more once the current consolidation is complete.
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